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Stern sets out an intellectual framework for achieving that. It begins by setting out a target sustainable level of CO2 concentrations, and although his proposed level of 550 parts per million may be somewhat high for the purist, it seems to be a pragmatic compromise. He then suggests that a price be established for carbon, and a market in emissions established by the use of tradable permits. He also proposes mechanisms for developing low-carbon transport fuels for reforestation and other technology transfers from the developed to the developing world.
There are of course formidable political and practical problems in getting such international mechanisms up and running. The attitudes of the US and Australian Governments have, until now, been major constraints. There are, however, encouraging signs of movement in both those countries. In the United States, California has taken a lead that has been matched by a number of other cities and states, and the White House looks increasingly isolated.
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In the short term there are three areas where the UK can lead international action. The first is at EU level. Manuel Barroso claims that the Stern report has forced him to change his mind and accept for the first time the importance of climate change for the EU economy. We should therefore seize this moment to press forward at EU level, not least by tightening up the allocations under the existing EU emissions trading system, but also by expanding the system to include aviation. We have an economic interest in doing so. The City of London is home to the world’s most active trade and emissions exchange. It already has over twice the volume of its nearest competitor, and looks well set to press home that advantage.
Secondly, we can take the lead in assisting developing countries to adopt more sustainable levels of energy use, and, indeed, to adopt more sustainable levels of energy generation for the world at large. Reports in today’s papers demonstrate how concentrated solar power, for example, has the theoretical potential to generate enough energy for the entire world’s needs from an area covering just 0.5 per cent of the world’s hot deserts. That is the kind of new technology we should be championing.
Thirdly, Stern is particularly clear about the value of trees in the overall carbon balance, the benefits of avoiding further deforestation and the relatively low costs of doing so. The British timber industry is willing and eager to assist in international work in this area and the Government should support it in doing so.
Domestically, the Government must accept that they cannot deal with the problem of climate change without the broadest possible support from the public and the business sector. They must therefore begin by making with passion and conviction the case for taking decisive action on greenhouse gas emissions. Frankly, if Ministers spent a small fraction of the time on this issue that they do on foreign adventures and macho posturing on anti-social behaviour, it would be time better spent.
I have two simple suggestions to help to get the overall message across. First, the Government should produce an edited version of the Stern report. The full version is not terribly digestible for a general audience, but an edited version could be. Secondly, they should distribute copies of Al Gore’s film “An Inconvenient Truth” to all secondary schools and make sure that all pupils see it. Galvanising public support, not least from young people, is the best guarantee that the Government will actually have the courage to take the lead on climate change.
The Government should then spell out that being a leader in this area need not harm the British economy. There are voices in the business community which are arguing that the UK should take action only as other industrialised countries do so. Some of their comments are childishly strident and should be
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The easiest way for government to directly affect greenhouse gas emissions in the short term is to change the way in which the public sector itself operates. The sector accounts for 11 per cent of all greenhouse gas emissions in the UK, and government at national and local levels have been extraordinarily complacent about reducing this level. For a Government who set literally hundreds of targets for public sector bodies, it is extraordinary that the performance measures for publicly funded organisations do not include performance targets to reduce greenhouse gas emissions. That should change.
It is not as though there is no good practice on which the public sector as a whole can build. Woking council has led the way with its climate change strategy, and that has led to reduction in energy use in its own buildings over the period 1991 to 2005 by more than 50 per cent. Every council in the country should be doing the same. The same general principle should apply to schools and hospitals. Although I accept that it may be difficult to improve the performance of many existing buildings, the Government should be setting higher standards in the current public sector building programme.
The Comprehensive Spending Review also gives a major opportunity for the Government to embed reduced carbon emissions through expenditure policies at national, regional and local levels. They should influence the sub-national review of economic development and regeneration, because a number of regions have nascent sustainability strategies that need further active government encouragement.
As I said, it is widely accepted that technological change must play a determining part in moving the globe to a carbon-neutral future. I believe that my noble friend Lord Vallance will have more to say on that later. But despite the recent creation of the Energy Technologies Institute, the Government are often too slow and inadequate in promoting technological change at home. It is, for example, widely acknowledged that cleaner coal technology has a major part to play because, even on the most optimistic scenarios, coal will continue to play a major role in energy production in the decades to come.
For coal-fired power stations in the UK, the first step is to install super-critical boilers. One of the largest power stations in Yorkshire is prepared to invest £100 million in a carbon-capture-ready super-critical boiler and is looking for £30 million support from the DTI, yet there appears to be a delay because bids from the relevant budget have been delayed from this autumn to later next year. A new sense of urgency is needed. It is hardly surprising that in a recent poll of energy experts, more than 70 per cent believed that the Government’s energy review would have no impact on achieving the UK’s 2012 Kyoto targets.
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The Government can also affect behaviour by appropriate tax and regulatory change. On tax, these Benches have set out specific proposals for taxing higher polluting vehicles and for air transport, both passengers and freight. In Richmond, our council has put policy into practice by pricing car parking permits in line with vehicles’ levels of emissions. The Chancellor is suggesting that he might follow suit. We hope that he does. But we hope that when he does, he uses the revenues raised to ease the tax burdens of the poorest taxpayers rather than simply using the additional cash to reduce the budget deficit.
On regulation, clearly a number of changes need to be made from tightening up the building regulations—frankly, how pathetic it is that in recent decades we have constructed buildings which are less energy efficient than those built by the Tudors—to better energy labelling of domestic appliances and simplifying planning rules for microgeneration.
For the first time the Stern report brings together science and economics, sets a framework to help policy makers decide how much action to take and with what policy instruments, and quite simply helps people understand this most critical issue. The Government say that they want to carry forward Stern’s principal recommendations. For all our sakes, I hope that they do so. For the future of humanity, there is no time to lose.
3.51 pm
Lord Bilimoria: My Lords, from the time that I walked into this House I have been showered by kindness from everyone; from my fellow Peers, the Convener of the Cross-Bench Peers and his team and all the officers and staff of the House. My supporters, the noble Lord, Lord Dholakia, and the noble Baroness, Lady Prashar, have both been an inspiration to me for many years. I am deeply grateful for the warmth of the welcome that I have received from everyone.
When my appointment was announced, I was surprised to discover that I was the first Zoroastrian Parsi to become a Peer. The Parsi community migrated to India from Persia more than a thousand years ago. Today, the Parsis number fewer than 100,000 people in India, a nation of more than a billion. To me the Parsi community has exemplified the principle that it is not good enough to be the best in the world, one must also be the best for the world. The Parsis historically have always put back into the community. I am so proud of what our tiny community has achieved, not only in India but also in producing the first three Asian MPs in Britain. The first was Dadabhai Naoroji, a Liberal, in 1892; the second, Sir Mancherjee Bhownagree, a Conservative; and the third, Comrade Sak, Shapurji Saklatvala, a Communist and Labour Party member. Then, of course, I realised that my appointment to the House of Lords has finally squared the circle, as I am a Cross-Bencher.
I came to this country as a 19 year-old from India for my higher education. I qualified as a chartered accountant in the City and graduated in law from Cambridge. But within six months of completing my
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Being an obedient son, I started Cobra Beer from scratch. Entrepreneurship and enterprise were conspicuous by their absence in Her Majesty's gracious Speech, in fact there was very little mention of business at all, and yet today there is a movement in entrepreneurship in this country. As it happens, the same week of the gracious Speech was Enterprise Week, now in its third year and with 3,000 events spreading the spirit of enterprise throughout Britain. In addition to Enterprise Week and many other initiatives, two years ago the National Council for Graduate Entrepreneurship was established by the Chancellor to encourage university students to consider starting a business as a career choice. I am proud to be its national champion.
How far we have come? When I was a student at Cambridge in the 1980s, the words “business” and “entrepreneurship” did not exist in the university vocabulary. Today, Cambridge has a flourishing business school, Cambridge Enterprise, and the Centre for Entrepreneurial Learning.
I am also proud to be chancellor of one of Britain’s truly modern universities; Thames Valley University, which is headquartered here in London. I like to call it “tomorrow’s university today”. It is a university that supports lifelong learning. Talking about lifelong learning, it is truly a privilege for me to be a Member of this House. What I am looking forward to more than anything is not only contributing as best I can, but to learning, and learning, and learning from my noble colleagues here.
When I came to the UK in the early 1980s, Britain was the sick man of Europe and had no respect in the world economy. There was also very much a glass ceiling here. In fact, I was told by my family and friends in India that I would never get to the top because I would never be allowed to get to the top. But look at Britain today—it is a true meritocracy, with opportunity for all regardless of race, religion or background. One of Britain’s greatest strengths is our open and free market. There is no way that I would have been able to start a beer brand from scratch with £20,000 of student debt, in the most competitive beer market in the world, if it had not been a true free market. A free market means huge competition, but it also means that anyone can have a go. I would much rather have it that way round.
What has changed as well is that we now live in a globalised world, where countries are not only interdependent but also far more integrated. I was very happy to see in the gracious Speech that the Government will work to take forward the World Trade Organisation Doha talks. For the past three years, I have served as the UK chairman of the Indo-British Partnership Initiative, which is supported by UK Trade and Investment. We have created the Indo-British Partnership Network, and
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The India that I was brought up in as a child was inward-looking, insular and protectionist. Even today, sadly, 300 million people in India live on less than a dollar a day. India is a country with enormous challenges; however some people fail because of, and others succeed in spite of. In spite of all its challenges, today India is one of the fastest-growing economies in the world, growing at 8 per cent a year. There is a thirst for liberalisation and reform and a new-found confidence in India, which is well on its way to becoming a global economic superpower. And yet, today India accounts for only 1 per cent of Britain’s total trade; and Britain has historically been a great trading nation. India accounts for less than 1 per cent of Britain’s investment abroad; and yet we are great outward investors. Although India is an enormous challenge for Britain, it is more importantly a tremendous opportunity for our country and for British business.
The Government’s role with regard to business has changed worldwide, from command and control to government being a catalyst, a helper and a supporter of business. For Britain to meet these new global challenges and opportunities, it is vital that the Government do all that they can to encourage and champion education, science and technology, entrepreneurship, innovation, and creativity. The Government must help British business to do business with India. The combination of government, education and business working together is very, very powerful. Britain is a tiny nation; we are just 1 per cent of the world’s population, and yet we have always punched above our weight. Today, we are still one of the five largest economies in the world. If we can stoke the flames of entrepreneurship in Britain, there is no limit to what we can achieve.
My great grandfather, DD Italia, came from the city of Hyderabad in India, where I was born. He was a Member of the Rajya Sabha, the Upper House in India, and he was a man in whose footsteps I am proud to follow here in our Upper House, the House of Lords. I am also proud to have been inspired by his motto, “to aspire and achieve”. My company and I have adopted this as our vision and added,
It may seem against all odds for Britain in this global world, up against giants like China and India, but we must aspire, and we must continue to achieve, and most importantly we must do so with what we have always been renowned for, and that is our integrity.
4 pm
Lord Bhattacharyya: My Lords, it is a great pleasure to follow the noble Lord, Lord Bilimoria. I congratulate him on an excellent and informative maiden speech, and I am sure that he knows that his great-grandfather’s grandson and I did our doctorates together at Birmingham University, so we have a lot in common. I also know that his finance director was born with me in the maternity ward, because his father was writing his thesis.
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I was reflecting on the noble Lord’s biography during his speech; it is a story of consistent achievement and willingness to take risks. His knowledge of business, understanding of the importance of social responsibility as a holder of the royal society’s Albert medal, grasp of export markets, and not least the wine he produces—which, with proper respect, like a Parsi, he has named after his father—will all be welcome contributions to the life of this House. He has made a very good start and we all look forward to hearing many more speeches from him. I hope that it will not interfere too much with his recreation of making beer.
The gracious Speech allows us to focus on the longer-term challenges of the UK economy. It is an opportunity to reflect on not only the legislation itself, but the economic issues that underlie it. First, I want to join noble Lords from all sides in thanking the noble Lord, Lord Sainsbury, for his long service as a DTI Minister. He has been a true innovator and will be missed by the science and technology community. One of the changes at the DTI that we have seen recently has been the setting up of the technology strategy board, to encourage growth of applied research. For a long time, applied work supported by government near the marketplace was a taboo. For the first time, the technology strategy board, as an arm’s-length body, gives recognition to applied research that will help drive the creation of wealth. Of course its budget should be at least £600 million, not under £200 million, but a first step is always welcome and I congratulate the noble Lord and Sir Keith O’Nions at the DTI on setting up the body so promptly. I also congratulate my noble friend Lord Truscott on his appointment. I am sure that he will act with distinction and expertise. His expertise in Europe will certainly be of great benefit to the scientific community.
The response from the Benches opposite and the media when faced with the last decade of growth has usually been to say that it all goes back to a Conservative Government—the “golden legacy” argument. The Conservative Government made vital changes to the structure of the UK economy, yet the “golden legacy” analysis has a major flaw: it ignores the importance of stability and security. Even ignoring the human cost of economic failure, from a business point of view, instability hurts. If you cannot operate with a reasonable expectation of low interest rates, it is hard to plan ahead. That has changed over the past decade. Secure and stable growth has been a great achievement of this Government.
Another argument from the media and the Opposition Benches has been that taxes are strangling the economy. Of course there are always justified critiques of specific taxes and rates but, when I travel abroad, I see that foreign Governments are unanimously impressed by our achievement of growth without recession. Foreign Governments and businesses can see the bigger picture, which is one of growth, stability, increased employment and increased prosperity. As a result of this stability the Government have been able to tackle public service reform. It is one of the hardest issues for any Government to tackle, with so many stakeholders, employees and vested interests, so perhaps the
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The gracious Speech has been spoken of as being about security. Put another way, the legislation is all about managing risk. So, how do we manage risk? We seem to be free of the doctrine of economic nationalism in the UK, but we need to do more to encourage inward investment with the greatest potential for growth. Successive DTI Ministers have talked about the need to focus strategically on key industries, whether they are called sunrise industries, the knowledge-based economy or high value manufacturing, and leaving everything else to the developing nations. I understand the point, but the sector-based argument ignores the fact that our economic competition is growing across all sectors. After all, technology can move at the click of a button and the education base of developing countries is growing fast—two factors that will have a huge impact on the knowledge-based economy.
For example, Tata Motors, another Parsi company in India, developed the first indigenous-designed Indian car less than a decade ago and now has ambitious plans to produce over a million cars a year within the next few years. China, which produced less than a million cars at the end of the previous decade, is already producing 3 million cars a year and is well on the way to becoming the world’s second largest car manufacturer.
That progress means that British companies and governments should not patronise those in the developing world by implying that only we can be at the top of the technology and skills pyramid. Our competitive advantage should involve a fiscal framework to attract and maintain investment. Alongside this, there should be emphasis on both maintaining an expertise in skills and an R&D base, and in building mutually beneficial partnerships with companies in developing countries. In short, we have to be excellent in everything we do.
A lot of comment has focused on the need for a stronger skills base. This has been a post-war problem for the UK economy. There have been many attempts to ensure that we build our skills base and we await the Leitch report with great interest. Business also needs to do more. A good example of what can be done is Network Rail. Under John Armitt and Iain Coucher, it has set up the Westwood leadership centre, adjacent to Warwick University, which trains people from all across the workforce in a range of areas of expertise. Such investment will be vital for the future of Network Rail and other UK industries. It is good to know that Network Rail has made a profit for the first time.
The Government set up the regional development agencies, such as Advantage West Midlands, which are creating a framework for sustainable economic development. The sub-regions of the West Midlands are now seeing real benefits from economic investment, from Staffordshire in the north to Warwickshire and Coventry in the south. We have also seen the benefit of the RDAs when they have
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